In FSC Franchise Co. v. Express Corporate Apparel, LLC, a printing company designed the logo for a restaurant and manufactured and sold promotional goods for the restaurant. The parties had a falling out, the restaurant sued for infringement, and the logo designer counterclaimed for infringement too.

In 1996, on a handshake, co-defendant Richard Donahue (presumably an employee or principal of Express Corporate Apparel) designed the branding for the restaurant and was the exclusive supplier of apparel for it. Beef O’Brady’s didn’t get any royalties from the sales; instead it simply stocked the Express Corporate goods in its souvenir shop.

In 2008, the two companies finally entered into a “Supplier Trademark License Agreement.” The grant clause stated:

Express Corporate also agreed:

The term and termination of the contract were thus:FSC Franchise sent a letter to Express Corporate in November terminating the license as of December 31, 2008 and demanded that Express Corporate stop making the merchandise. Express Corporate didn’t, so FSC Franchise sued.

Express Corporate counterclaimed for trademark infringement, claiming that it was the owner of the mark for apparel, although it did acknowledge that Beef O’Brady’s was the owner for restaurant services. (Although not mentioned in the opinion, after the suit was filed Express Corporate also filed a trademark application for the mark for apparel.) But it was an easy call for the court on ownership. It didn’t need to resort to discussions of the relatedness of restaurant services and apparel, or the concept of promotional goods, to decide:

Express Corporate admits that the marks are identical but argues that the plaintiff’s “registered trademark rights begin and end with the food and beverage service business and do not extend to clothing and apparel items. Instead, these trademarks as applied to clothing and apparel items have been lucidly the domain of [Express Corporate].” (Doc. 21 at 3) Common sense belies this argument, which contradicts the express terms of the parties’ “Supplier Trademark License Agreement .”. . . .“A licensee’s prior claims of any independent rights to a trademark are lost, or merged into the license, when he accepts his position as licensee, thereby acknowledging the licensor owns the marks and that his rights are derived from the licensor and enure to the benefit of the licensor.” [Citations.] Upon signing the license, Express Corporate’s prior independent use of the Beef O’Brady’s marks merged into the license, and Express Corporate acknowledged the plaintiff’s ownership of the marks.

Express Corporate Apparel advertises on it’s website that it does “Logo Development!” One wonders how Corporate Apparel’s business will fare once it becomes known that it claims to own the trademarks it designs.

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Ms. Chestek is admitted to practice in Connecticut, the District of Columbia, Massachusetts, New York and North Carolina and is Board Certified by the North Carolina State Bar's Board of Legal Specialization in Trademark Law.

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